Context: Expenditure limits for candidates have been enhanced from Rs 54 lakh-Rs 70 lakh to Rs 75 lakh-Rs 90 lakh for Parliamentary constituencies and from Rs 20 lakh-Rs 28 lakh to Rs 28 lakh-Rs 40 lakh for Assembly constituencies.
Key Points

• Ahead of assembly elections in five states, the Election Commission of India (ECI) has increased the expenditure limits for candidates contesting in Lok Sabha and Legislative assembly polls.

Key Points

• Expenditure limit refers: to the amount a candidate is allowed to legally spend on election campaigning, including public meetings, rallies, advertisements, posters and banners, and vehicles. 
• Submission: All candidates are required to submit their expenditure statement to the EC within 30 days of completion of an election.
• There is incidentally no limit on how much a political party can spend on elections, but they have to submit a statement of their expenditure to the EC within 90 days of completion of the elections.
• The last major revision: in the election expenditure limit for candidates was carried out in 2014, which was further increased by 10% in 2020.
• As per the Representation of the People Act (RPA), 1951, Section 77: every candidate must keep an account of all expenditure incurred from the date on which they are nominated to the date of declaration of the result.
• Section 10A of the Act states that an incorrect account or expenditure beyond the cap can lead to disqualification of a candidate for up to three years.

Changes made
Lok Sabha polls

• For Lok Sabha polls, the revised expenditure limit is now Rs 95 lakh for bigger states and Rs 75 for smaller states. Earlier, the limit was Rs 70 lakh for bigger states and Rs 54 lakh for smaller states.

State assembly elections

• For the state assembly elections, the expenditure limit has been enhanced to 40 lakh from 28 lakh.

Need of this move

• Cost Inflation Index: According to the Election Commission of India, the revision in the expenditure has come due to the rise in the cost inflation index and the size of the electorate.
• Increase in electors: The Harish Kumar committee recommended enhancing the limit after taking into account the “demand from political parties” and the “increase in electors” from 834 million in 2014 to 936 million in 2021.
• Digital campaigning: The committee also took into account the plea by political parties regarding the added expense they had to bear of digital campaigning on account of Covid.

Committees on Election reforms

• Indrajit Gupta Committee Report on State Funding of Elections
• 170th Report of Law Commission of India on Reform of the Electoral Laws
• Report of the National Commission to Review the Working of the Constitution of India.
• Dinesh Goswami Report on Electoral Reforms
• Tarkunde Committee Report on Election Expenses